An ‘Earth-Shattering’, Low-Risk Dividend Stock

Today, I want to tell you about a low-risk, high-yield dividend stock that has delivered huge market-beating returns to our Cabot Dividend Investor subscribers over the past 18 months. But first, a story about something remarkable that happened on my recent visit to New Zealand…

Earthquake!

One month ago, at 3:31 in the morning, in Christchurch, New Zealand, I was shaken out of a sound sleep by an earthquake that measured 4.3 on the Richter scale.

It felt as though a couple of strong men were shaking the bed.
I didn’t panic; my first thought was regret—that I had missed the start of the earthquake by being asleep!

But the experience did make me thankful that I live in a place where earthquakes are extremely rare.

So what was I doing in Christchurch, which is far from a tourist hot spot these days?

My Christchurch story starts back in September 2008—near the nadir of the financial crisis—at a meeting of fellow publishers in Chicago.

One of the attendees had come all the way from New Zealand. And seeing that it’s such a long trip, he had brought his wife too, and they were making a tour of the U.S.

To make a long story short, when they were in the Boston area, my wife made a delicious home-cooked meal for them (on a cold and rainy autumn night). And we’ve stayed in touch ever since.
So, given that we were heading to Sydney, Australia last month for a family wedding, it only made sense to stop in New Zealand, too, to see them at their home in Christchurch.

And, given that Christchurch has had some serious earthquake activity in recent years, it made sense to bone up on the subject.

The main facts are these:

On September 4, 2010, a 7.1 magnitude earthquake occurred, centered 25 miles from Christchurch, 6 miles deep. No deaths were directly attributed the quake.

Six months later, on February 22, 2011 there was a 6.3 magnitude earthquake, centered just 6 miles southeast of the center of the city, and only 3 miles deep.

In that earthquake, 185 people died, 115 of them in the collapsed Canterbury Television Building. More than 6,000 people were injured. More than 1,000 buildings were rendered unfit for use. And more then 10,000 people subsequently moved out of the city (which had a population of 386,000).

Five years later, Christchurch is still rebuilding. But it still has an excess of empty lots—there’s no shortage of parking. And plenty of people are still arguing with their insurance companies.

And, it still has aftershocks, like the one we experienced. In fact, in the five years since the big one, there have been some 10,017 measurable aftershocks!

On the afternoon that we arrived in Christchurch, our friends gave us a tour of the downtown, so we could see firsthand where they each used to work. Sort of. Both their buildings are now gone—plus, the publishing company was forced to work out of their house for 18 months, as rents in Christchurch went sky-high following the earthquake.

We also saw the ChristChurch Cathedral, built between 1854 and 1904, which now looks like this—and may or may not be completely demolished.

And we saw its temporary replacement, the Cardboard Cathedral, which looks like this inside.

Bottom line, there’s still a lot of work to do. And yet, from my optimistic perspective, Christchurch is a relatively safe place to live today, given that everything loose or fragile or unsteady has already come down!

Still, people in Christchurch are careful—because they don’t feel as secure as most of us. They don’t put good glassware on shelves. They have emergency supplies at hand—just in case another big one hits. And they’re careful to keep their phones charged.

Interestingly, both my research and my personal experiences illuminate a key characteristic of people in the aftermath of such a disaster. Those people with strong social networks often grow stronger, as they deal with a “common enemy,” while those with weak social networks grow less resilient, more anxious.

With more than 10,000 aftershocks, it’s totally understandable!

One Low-Risk Dividend Stock

So, are there any compelling investment opportunities in New Zealand?

Given that the country’s economy still has a large agricultural component, and that a “brain drain” has been a problem in recent decades, no.

On the other hand, the complete collapse of commodity prices around the globe in recent years does make me eager to spot a nascent uptrend in despised commodities that have been discarded in the panic selling of recent months.

Coal, for instance.

Last week the news that Peabody Energy (BTU) might go bankrupt made big headlines, and I like that. It’s headlines like that that make market bottoms.

Unfortunately, none of the Cabot analysts are recommending coal yet.

A quick look at the group tells me that Alliance Holdings (AHGP) may be the best prospect, given the stock’s liquidity and the company’s ability to keep on making a profit.

But that’s a high-risk play right here. So instead, I’ll just keep an eye on that and a few others.

A more prudent investment, meanwhile, would be Xcel Energy (XEL), the utility that provides mainly electricity (and some natural gas) to customers ranging from North Dakota to Michigan to Texas. The dividend stock currently yields 3.2%, and subscribers to Cabot Dividend Investor have racked up a gain of 36% in the stock over the past 18 months.

If you’re interested in joining them, and in building a well-diversified portfolio of high-quality dividend stocks, your best bet is to click here now.

Cabot Wealth Advisories

We designed Cabot Prime for dedicated investors like you—investors who want to own the best stocks, collect the biggest profits, and lock in a rising source of income for life. With Prime membership, you get full access to nine of our top advisories and many members-only benefits, including free admission to our annual Investors Summit.

Cabot Benjamin Graham Value Investor uses the methods developed by the father of value investing, Benjamin Graham, and popularized by Warren Buffet. A system that works well in all markets, it buys stocks when they're dirt cheap, and sells when they've reached full valuation, a process that takes two years for the average selection. What's important here is buying only when a stock's price is below its Maximum Buy Price, holding through thick and thin, regardless of the news or the action of the stock, and then selling when the stock reaches its Minimum Buy Price. These are great stocks to own if you're a conservative stock investor. Chief Analyst J. Royden Ward explains clearly how to build a portfolio of stocks that meet his strict requirements-plus every issue includes updated rankings on his "Top 275 Value Stocks," so you can check on other stocks you may own.

Cabot Dividend Investor focuses on preparing for retirement, recommending a solid range of income-generating stocks, preferred stocks, REITs, MLPs, closed end funds and utilities, with particular emphasis on risk, dividend safety and dividend growth. If you’re retired or thinking about retirement, this advisory is designed for you. Cabot Dividend Investor’s proprietary Individual Retirement Income System (IRIS) will help you allocate your assets for capital appreciation, current income, growth and future income investments according to your retirement goals.

Cabot Emerging Markets Investor focuses on the emerging markets economies, with special attention paid to the BRIC (Brazil, Russia, India and China) investment landscape. You'll discover the value of international diversification and the profit potential of investing in countries whose economies are growing far faster than that of the U.S. All these stocks are traded on U.S. exchanges, usually as American Depositary Receipts. Under the guidance of Chief Analyst Paul Goodwin, Cabot Emerging Markets Investor was recognized as the top investment newsletter in 2006 and 2007 by Hulbert Financial Digest, and was rated by Hulbert as one of the top investment newsletters in every five-year period 2004 to 2011.

This flagship investment advisory has been published since 1970 and it is recommended for all investors seeking to grow their wealth. You’ll receive invaluable investing lessons, so that you won’t just become a more successful investor—you’ll become a wiser investor!

Cabot Options Trader’s Chief Analyst and options expert Jacob Mintz uses calls, puts and covered calls to guide investors to quick profits while always controlling risk. Beginners and experts alike can benefit from following Jacob’s advice. Whenever Jacob determines the time is right, he sends specific option buy and sell alerts via email and text-message for immediate action. He also sends out a weekly update with his views on the options market, open option positions and his outlook for the coming week.

Cabot Options Trader Pro’s Chief Analyst and options expert Jacob Mintz uses the full spectrum of option strategies to recommend the option that best suits the trade opportunity—calls, puts, spreads, straddles, iron condors and more—while always controlling risk. Whenever Jacob determines the time is right, he sends specific option buy and sell alerts via email and text-message for immediate action. He also sends out a weekly update with his views on the options market, open option positions and his outlook for the coming week.

Cabot Small-Cap Confidential is a limited-circulation advisory for investors seeking profit opportunities in high-potential small company stocks. Each month, small-cap expert and Chief Analyst Tyler Laundon features in-depth research on one outstanding small-company stock that is a pioneer in its field and undiscovered by institutional analysts. Updates on all recommended stocks are sent weekly. The circulation of Cabot Small-Cap Confidential is strictly limited because the stocks recommended are often low-priced and thinly traded. In the publication’s first five years, spanning 2007-2012, the average stock recommendation gained 30.5%.

Cabot Stock of the Week offers the very best of all Cabot stocks across the investing spectrum. Each stock is personally selected by Cabot’s President and most Senior Analyst Timothy Lutts, and guided by the collective wisdom of all the Cabot expert analysts. As a subscriber of Cabot Stock of the Week, you’ll build your wealth and reduce your risk with the single best stock each week for current market conditions among growth, momentum, emerging markets, value, dividend and small-cap stocks.

Designed for experienced investors, Cabot Top Ten Trader is your ticket to fast profits in stocks that are under accumulation now. Every Monday you’ll receive a one-page profile of each recommended stock, including fundamental analysis, technical analysis and buy ranges. Plus... each Friday, Chief Analyst Michael Cintolo will give you an update titled "Movers & Shakers," so you’ll always know his latest thoughts on these fast-moving stocks. Cabot Top Ten Trader is your best source of advice on investing in the market’s hottest stocks.

Yes, you can have Growth AND Value! Combining both growth and value in her growth-at-a-reasonable price strategy, Chief Analyst Crista Huff uncovers stocks with strong growth catalysts that are selling at attractive valuations—the stocks that are temporarily overlooked by mainstream analysts and institutions. Crista applies her stringent screens to deliver the best stocks in three portfolios: Growth, Growth & Income, and Buy Low Opportunities. A subscription includes monthly issues with weekly updates, special bulletins with market and stock alerts and email access to Crista.

Wall Street’s Best Dividend Stocks presents the best income investments from the top Wall Street analysts, researchers and advisors. Editor Nancy Zambell scours more than 200 advisories and research reports to select the top recommendations. Dividend recommendations include high yield, growth and income, REITs, mutual funds, ETFs and more. One Spotlight Stock is featured each month, along with Nancy’s insight on the market and updates on past recommendations. One top recommendation arrives in your email box each morning, and then gets collected into an easy-to-read digest of 30 to 35 top recommendations each month.

Editor Nancy Zambell scours more than 200 advisories and research reports to select the top recommendations by the top analysts. Selections run the full range of opportunities: growth stocks, value stocks, technology, small-caps, biotech, pharmaceuticals, mutual funds, ETFs and more. One Spotlight Stock is featured each month, along with Nancy’s insight on the market and updates on past recommendations. Thirty-plus recommendations are delivered to you in Daily Alerts directly to your email box, and collected in an easy to read digest each month.

Reviews

“Dear Mr. Goodwin, Mr. Cintolo and Mr. Lutts,
I cannot express how favorably impressed I am by your:
1) Unbiased and honest views of the stock market; you have proven that honesty is still a valid word
2) Unparalleled experience in both technical and fundamental analysis of the stock market
3) Your unequaled care for your subscribers
I am writing this today because I think you should know that subscribers "feel" the difference between you guys and other so called "up & up" fancy expensive market letters. I have lost a bundle subscribing with them and they did not deliver the goods. They have a lot to learn from you people and I also commend you on the Outstanding Professionalism that is synonymous with the Cabot name. Believe me these are not compliments, these are facts, and I have never, until today, written a thank you letter such as this one.Suffice it to say that you already saved me a bundle of money by saying it "like it is" and steered me away from the pundits (bandits?) and the empty taking heads. Dear sirs, you have in me a subscriber for life. Best regards to all.”

-J. Der Mesropian, Fulton, New York

Market Update

From Cabot Top Ten Trader

The market remains in great shape, with all the major indexes in gear on the upside and, to this point, refusing to retreat much despite strong advances during the past few weeks. The next big test for stocks is earnings season, which is beginning to rev up and is sure to cause a few headaches, but also likely to cause some new leadership to lift off.